Tax saved on a $5,000 RRSP contribution
Federal and provincial tax saved, by salary and province:
| Salary | Ontario | Quebec | British Columbia | Alberta |
|---|---|---|---|---|
| $50,000 | $1,103 | $1,285 | $953 | $1,100 |
| $75,000 | $1,633 | $1,806 | $1,410 | $1,525 |
| $100,000 | $1,508 | $1,806 | $1,410 | $1,525 |
| $150,000 | $2,170 | $2,373 | $2,035 | $1,800 |
How the RRSP deduction works
Money you contribute to a Registered Retirement Savings Plan is deducted from your income on your tax return. You pay no tax on investment growth inside the plan, and you are taxed when you withdraw, usually in retirement at a lower rate.
Your contribution room is 18% of the previous year's earned income, up to an annual maximum, minus any pension adjustment from a workplace plan. Unused room carries forward.
When an RRSP pays off the most
- When your marginal rate today is higher than the rate you expect in retirement.
- When you earn above about $58,000, where the second federal bracket starts.
- When your employer matches contributions through a group RRSP.
Getting the saving sooner
Contributions through payroll reduce the tax withheld from each paycheque. If you contribute on your own, you get the saving as a refund when you file. You can also ask the CRA to reduce withholding at source (form T1213).
RRSP vs TFSA at a glance
| RRSP | TFSA | |
|---|---|---|
| Contributions | Tax-deductible | Not deductible |
| Growth | Tax-sheltered | Tax-free |
| Withdrawals | Taxed as income | Tax-free |
| Contribution room | 18% of earned income, up to a maximum | Annual limit for everyone 18+ |
| Best for | Higher tax rate now than in retirement | Lower incomes, flexibility |
RRSP and buying a home
The Home Buyers' Plan lets first-time buyers withdraw RRSP savings tax-free for a down payment and repay them over 15 years. The First Home Savings Account (FHSA) combines a deduction like an RRSP with tax-free withdrawals for a first home.
Frequently asked questions
How much tax will I save with an RRSP?
Roughly your contribution times your combined marginal tax rate. On $75,000 in Ontario, about $1,633 on a $5,000 contribution.
What is the RRSP deadline?
Contributions made in the first 60 days of the year can be deducted on the previous year's return.
Is an RRSP or TFSA better?
RRSPs are usually better when your tax rate is high now and lower later; TFSAs are more flexible and better for lower incomes.
Can I use my RRSP to buy a house?
Yes, through the Home Buyers' Plan, which lets first-time buyers withdraw RRSP savings tax-free and repay them over 15 years.
Figures use CRA and Revenu Québec 2026 federal and provincial brackets, basic personal amounts, CPP/QPP, EI and QPIP rates for an employee. Read our methodology. Last updated September 25, 2026. Estimates for information only, not tax advice.